Bangkok Shipowners and Agent Association

Bangkok Shipowners and Agents Association
The Association will not concern itself with freight rate and/or freight arrangements.
Home News World Shipping News K Line sinks further into the red
K Line sinks further into the red PDF Print E-mail
Friday, 03 February 2012 08:27
CIOnline 1/2/12
                                                
K Line lost JPY42,166 (USD542.4) million in the first nine months of its financial year (ending March 31, 2012), which is little better than the staggering loss of JPY68,700 million declared in the thick of the last financial recession between April 1, 2009 and March 31, 2010. As a result, it has revised its forecast for the whole year (made at the end of October) from a loss of JPY32,000 million to a loss of JPY54,000 million.

Its revenue only fell by 3.8% compared to the same period last year, down to JPY732,884 (USD9,427.4) million, but its operating result (EBIT) before exceptional items crashed from a profit of JPY62,343 million to a loss of JPY31,612 (USD406.7) million, producing a negative return on sales of 4.3%. This compares with Hanjin's negative return of 5.2% declared on Monday. Amongst other things, K Line blames the economic slowdown, increased fuel prices, the protracted extremely high value of the yen, and an excess of large container vessels in service for its demise.

In its 2009/10 financial year, container shipping accounted for 50% of total revenue, making it very dependent on the sector. Interestingly, container shipping produced an operating profit of JPY5 billion in that year, but the Group lost JPY52,100 million, whereas, during the year before, the tables were reversed, with container shipping losing a massive JPY67,000 million, and the Group making JPY71,600 million.

The difference this year is that all divisions appear to be heavily in the red. Interestingly, in K Line's forecast for the remainder of the financial year between Jan 1, 2012 and March 31, 2012, it mentions that: 'The container business will remain uncertain for the time being because of the sluggish global economy. Freight rates, however, have bottomed out since the beginning of this year. Further recovery is expected.'
This is not the advice of many freight rate pundits, although the evidence is beginning to support the view.